New Franchisor's Experience with Cookie-Cutter Franchising
I'm a newly established franchisor who has just begun working with my first franchisees and have already discovered some pitfalls and traps in seeking help to build a reputable franchise system. Here's what I've learned about quality franchising along the way. I thought that you might enjoy hearing about one franchisor's pursuit of quality.
First, I built what I believed to be a sound model around a business that I love, and thought through each step because my goal was to franchise from the beginning. I was meticulous in executing my plan.
Second came the franchise step, and that's where I had to put myself in someone else's hands. I was surprised by a common strategy among franchise consultants that amounted to a boiler-plate, cookie-cutter approach...get an FDD written, write some Ops manuals, pay a hefty fee...then pay a bunch more money to advertise online, and then pay yet another person 40% of your franchise fees to filter through those leads and walk your recruits through the recruiting process. Even more surprising was that despite the way that many consultants sold their services, consultation usually ends at the completion of the legal documents, with very little time and effort put forth into growing and managing the franchise system.
At first, as a naïve, willing to learn franchisor, I trusted it all, only to learn later that my suspicions were right. After spending for consulting services I was still trying to figure out the fundamentals of ‘being a franchisor' as opposed to being prepared to develop my network.
Although my core business was solid, franchising fundamentals remained a mystery. A trusted attorney referred me to a mentor who listened, seemed to understand, and agreed to work with me even though development funds were now low. I began the process ‘again' with energy because finally the process was a comfortable one; one dealing with people and education, and that is how I envisioned the process in the first place.
I was fortunate to find a mentor; a true franchise consultant who really cared about who I was, what I was trying to do, and what I needed to accomplish it. I openly thank Nick Bibby. Without a sales pitch or false promises he just kicked out the old and "taught' me the art of franchising.
My goal was and is to grow a strong, "people focused" franchise for those interested in my type of work, and we have that now.
This isn't an effort to gain cheap notice, it's just my statement on this site, a site that seems to wrestle with ugly franchise problems, that there are people out there who are interested in building and offering ‘quality' in franchising.
Jason Puleio
Founder, The Barker Lounge
Moved
This comment has been moved here. The article has nothing to do with Quiznos.
Do Cookie-Cutters Build Good Franchise Systems? Not in This Case
Jason,
Welcome to the daily news site for franchise owner-operators.
I think it would be of immense benefit to not only new franchisors but also franchise owner-operators to understand the complexity of building a quality franchise system from the ground up. Your story is really an excellent case study that provides considerable insight into the industry and its key players.
Keep blogging with us about individual successes (even if they're small), the bumps you hit along the way and developments in your industry.
Mr. Blue MauMau
Do Due-Diligence Before Franchising
There have been comments on this site about a start-up franchisor of deluxe portable potties. EJ Kendall had to make a second go of her potty business. She blamed the failure of her first business on franchise development consultant Novidian. Here's what the article concludes on what to do to avoid such a mess:
Jason, would this have been enough for you? I should caution that some of the franchise consultants have quite the old boy's network of references.
Re: Do Due-Diligence Before Franchising
Until you try you will just never know - no how much research you do you need to live it, iron out the issues and move on.
References
No-one ever refers you to someone who they know will give a bad reference.... they have usually been "Pre-qualified before their names have been released.
I'm not sure it would have
I'm not sure it would have Darnelle. I contacted references that were provided to me...a mistake because you are DEFINATELY right....they did have quite the "old boy's network of references". They also put me in touch with people along the way that turned out not to be in my best interest, but instead nurturing to their business relationships.
Perhaps it may have been a whole bunch wiser for me to randomly go through their list of franchisors and call them...find out what each of them had to say. I'm not sure how I might avoided this. One thing that certainly would have helped would have been knowing about this site and reading the positive things that people had to say about the good people out there who want only to do the right thing.
Gut Check
My guess is, Jason, that you realized early on in your gut that something was wrong, but found reasons to proceed in the face of your worries.
Am I right?
Michael Webster PhD LLB
Franchise News
Best place to turn brand into a franchise
As a successful business owner considering franchising, where would you recommend I start? What is the best way to turn my brand into a franchise?? Please help...
Gut Check Indeed
You are so very right Michael. Despite some gut feelings that grew in intensity as we got deeper into the process (and pockets), I did indeed find reasons to proceed in the face of my worries. I imagine this is somewhat human nature. It was easy to discard those gut feelings as being unwarranted or illegitimate seeing as though this big world of franchising was new to me and my trust was in those who knew it well.
I suppose it would be like a little boy being taken on a big scary ride by his parents for the first time. There would naturally be some hesitation, some gut feelings telling him "don't go"...but the little boy would ultimately fall back on the trust he has in his parents to lead him in the right direction in the big unexplored world that he's a part of.
Bottom line now that all is said and done...good lesson learned, but learned the hard way. I'm wiser and our franchise is in a better position to succeed because of all this.
Who???
Ok Jason....which consulting firm did the cut and paste con job on your franchise docs? I am sure you do not want to divulge the source. However, you may save another would be franchisor the same headache that you went through the first time around the block.
RE: Who???
My money is on The IFranchise Group. They're known for charging outrageous prices for boiler plate documents that their island of misfit consultants work on.
Re: Who???
Guest,
I'm not so sure that divulging sources would "save another would be franchisor the same headache that (I) went through the first time around the block". The truth is, as evidenced yet again by Nadia's latest post 'Another New Franchisor's Experience', is that this type of franchise consultation seems to be the norm and not the exception. "Would be franchisors" are probably more likely to come across this type of consultation than they are not. I think what's important for these people to know to avoid these same headaches is that franchising has very little to do with the cutting and pasting of documents or the registration of your franchise in the proper states. Anyone can do that for you...anyone! It's the ART of franchising that's important and that is precisely what is NOT available on the market!!!
Re: Re: Who???
Unfortunately you are right Jason: the franchise consulting industry has some bad operators providing services. There are a lot of good, honest people in franchising but their efforts are overshadowed by poor work, misleading promises, and downright crooks. I am glad to hear it worked out for you in the long run.
Cookie Cutters
It seems none fo these "cookie-cutter" consultants deliver on what they promise... seen it over and over and over again.
Well said Darnelle. I
Well said Darnelle. I think my trials and tribulations are far more common than not. Although I do have to disagree with your statement that it "sounds like just about every franchise consultant out there". Although I do feel like the majority get away with their cookie approach and lack of personalization, i think it's important to the franchising industry and to "would-be franchisors" to stay on the "glass half full" side of the fence by acknowledging that there certainly are consultants who do it right. Nick Bibby is a prime example. The clear vision and 'desire to do right' by him and people like him are the things that we should be talking about.
Guess Who Cranks Out Franchisors
The question really is who doesn't cut out franchise networks this way?
This sounds like just about every franchise consultant out there. My money is that it is one of the biggest firms - Francorp or Seid's outfit.
Who do YOU think would crank out franchises in a cookie cutter manner? Please state why.
Cookie cutter franchises - consider the following:
Most franchise documents are quite similar by their nature.There are standard terms, and any particularities due to the particular nature of the business are also rather cookie cutteresque. Restaurant contracts tend to be like other restaurant contracts, etc,
The problem with the franchise consultant arena is that, since the consulltant won't make money unless you say yes you do agree to franchise your business, most will tell anyone that any business is perfect for franchising. Saying no means you don't get a fee. DUH!!!
That is a built in tendency in the business. Some claim they don't operate that way, and I dont have enough consultant experience to know who is doing what. Frankly, I look at what I know the cost and lead time to be in a really franchisable situation and I tell them that. In almost every instance, I don't get hired to carry a franchise through its gestational period.
I tell 'em that the first step is feasibility and put a price on feasibility testing. I tell 'em they shouldn't think of committing to franchising without udergoing that first step and that that's cheap, which it is. I think they are being told by consultants that it's a simple package deal that can be executed easily if you have the right guidance. I think they are being told that because they say they are being told that. I don't think it's that simple.
The reason I don't think it's that simple is that there are so many failures amongst the new franchisors. Lawyers compete for doing "cheap" franchise documents because they don't do any due diligence on the information the clients give them. Putting the franchisor client to the tests of proving up the reliability of what is stated in the franchise documents is a lot of work that has to be paid for. I don't think consultants do a lot of that kind of work in their packages. I see so much that simply couldn't be true, that consultant/lawyer due diligence is conspicuous only by its absence.
But the fact that the paperwork looks similar does not surprise anyone who thinks about what franchise paperwork needs to look like. --
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
These franchise consulting (insert Deadwood phrase)
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Here is a little lesson in reality for some of you. If you really have a good concept you will find no shortage of people who want a piece of the action. You will not need to seek them, they will find you. Successful money is always looking for a home. I know of few people of means who are always looking for a place to put their money to work. However they tend to be shrewd judges of concepts. Interestingly, I have never noticed them to be particularly tough negotiators; they simply want to employ their capital in a mutually beneficial manner. To that end they tend to realize the win-win relationships mean they will continue to have places to deploy excess capital, where as vampiristic opportunism means they will always have to look for a new partner.
So if you are sitting in your pizza parlor and some franchise consultant contacts you about the wonders of franchising you shall behold once you write them a check, realize this also means that shrewder knowing eyes have already passed you over.
Undisputed....
Francorp is the heavy weight champ of cookie cutter franchise documents. The consultants selling the work will argue vehemently that everything they produce is customized but it just is not true. In fact, over the years they have inadvertently left specific language from one client's documents and inserted the same language into a different client's documents as a function of cutting, pasting, and not carefully editing. At roughly 100 projects per year, it would be physically impossible for Francorp's writers/consultants to customize every page.
Re: Undisputed...
While I don't know with certainty of any specific examples of Francorp's "cookie-cutter-ness", I did get that general feeling when I visited them. I flew out to Chicago and met Don and got the grand tour and taken out to lunch and all that fun stuff. They put on a good show. Their operation seemed to be a very welled oiled machine that just cranked out new franchise concepts. Ultimately, I chose not use their services for that very reason...because they indeed seemed like a heavy weight in the art of cookie cutting. And I wasn't looking for a franchised franchise system. I wanted a personalized experience tailored to my system's needs...and those needs were unique and specific like every new franchisor's. I did enjoy my short time with Don, but I just didn't get that personal feeling I wanted from the organization. Apparently, it's quite hard to come by these days!
Re: Re: Undisputed...
Perhaps even impossible
Re: Re: Undisputed...
Yes, Don Boroian is a very smooth operator and his firm is indeed a well oiled machine. They absolutely put on a good show....Boroian makes sure of that. The tour is essential to their presentation. How did you like the 30 year old furniture? Anyway, I find it very interesting that you got the feeling they just crank out new client after new client. Your instincts were right on the money. Boroian needs to sign as many new clients as possible to keep the cash flowing. If he cannot accomplish that payroll will not be met nor will the very large lien imposed on the firm by the IRS as well as Boroian's personal tax bill.
...so I've heard. You
...so I've heard.
You speak passionately and as if you them well. What is your role in the franchise world? Are you a franchisor, franchisee, consultant, attorney, etc...?
Do tell...
Re: ...so I've heard. You
Former employee at a particular franchising consulting firm.
Re: Re: ...so I've heard. You
Former employee? What kind of person goes out of their way to negatively speak about their former employer? What does that say about that person?
You are right jason, you should definitely trust someone like this' word (sarcasm).
Great source.
Anonymous Guest.
Being new to BMM, I'm finding it surprisingly difficult to blog with anonymous bloggers? I wish everyone would use their real names when posting. I'll bet there would be a whole bunch more credibility and fewer loose tongues on these boards.
Former Employee
Guest writes: "Former employee? What kind of person goes out of their way to negatively speak about their former employer? What does that say about that person?"
Uh, some the best informants are former employees.
Michael Webster PhD LLB
Franchise News
Re: Former Employee
Indeed.